Absence of elected body hampers decentralisation

For two years, now, the Bruhat Bengaluru Mahanagara Palike (BBMP) has been managed by bureaucrats, without an elected body. The BBMP Act 2020 was notified in December 2020. The subsequent notification of Fiscal Responsibility and Budget Management Rules (FRBM), 2021, specifies how the BBMP must formulate and approve the BBMP budget.

The new BBMP Act provides for the creation of a Constituency Consultative Committee (CCC) for every assembly constituency of the BBMP area, Zonal Committee and Ward Committee, apart from eight standing committees of the BBMP. At present these do not exist, as there is no elected council.

Committees at many levels

The chairperson of the CCC, who is an MLA, provides advice and suggestions to the Zonal Committee. The Zonal Committees have councillors with one of them as the chairperson, an engineer responsible for public works in the zone, an expert in solid waste management and an expert in urban governance nominated by the government.

Zonal Commissioner is the coordinator of the Zonal Committee which is expected to convene at least once a month. This committee is expected to guide and supervise the developmental works. One of the important functions is to allocate funds to each of the wards under the zone. The Ward Committee must have 10 persons, with the corporator as the chairperson and 50 per cent and 25 per cent representation of women and SC/STs.

The Zonal Committees of the BBMP are required to submit a budget estimate for the ensuing year to the Mayor. The estimate should contain the budgetary requirement for the implementation of existing schemes, running expenses and capital expenses. The Zonal Committee proposals have to be backed up by the consultations with the Ward Committees which in turn are expected to have had the public consultations as required.

The Chief Commissioner of BBMP considers the estimates from the Zones and prepares the budget estimate for the BBMP. This contains receipts and payments of the previous financial year and expected receipts of the ensuing financial year, rates of taxes and surcharges and fees levied in the current year and proposed for the ensuing year.

The estimates thus prepared by the Chief Commissioner in the prescribed format come before the Standing Committee for Finance Taxation and Appeals on or before January 15, which reviews and changes it if required, and shares it with the councillors before February 1.

The Corporation should approve the budget at least three weeks prior to the beginning of the financial year (before March first week) and submit it to the government for approval. This is expected to be approved within two months, with or without changes. The budget is considered deemed to be approved if the state does not reply within two months.

Thus, the Act provides provision for a truly bottom-up approach to the budgetary process and the FRBM rules provide essentials for sound fiscal management. The BBMP is required to maintain a revenue surplus (eliminate deficit if any) and the fiscal deficit should not be more than 3 per cent of total receipts of the previous financial year.

Making estimates realistic

For the purposes of projection of own revenue components of revenue receipts for the ensuing year, the compound annual growth rate (CAGR) for the previous 5 years and actuals for the previous year have to be taken. This makes the estimates more realistic. The grants from state and union governments and borrowings are to be considered based on revised estimates of the current year.

The Standing Committee on Taxation and Finance has to ensure at least two meetings at the Ward Committee level for the preparation of the budget and finalisation, along with two city-wide public consultations with citizen forums. An amount equal to 10 per cent of the total money available for developmental works after deducting the committed expenditure has to be set aside for works proposed by citizens.

The new BBMP Act has provisions for using indicators of fiscal marksmanship and stipulates the production of Fiscal Responsibility and Budget Management statements along with the budget every year which project the status for the next three years. The audited accounts and the annual performance report are to be uploaded onto the website before August 31 every year.

A full cycle of the budget process, as envisaged in the new Act and rules, is likely to bring in a paradigm shift in the budget, and its process along with transparency and accountability to the citizenry. But for this to materialise, we must wait until we get an elected council.

(The author is a senior research adviser at the Centre for Budget and Policy Studies)